We recently compiled a list of the 10 Trending AI News Updates on Investors’ Radar. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against the other trending AI stocks.
President Xi Jinping recently held a rare meeting at Beijing’s Great Hall of the People with some of the biggest names in China’s technology sector. Four years back, tech regulations in China and the government’s approach toward the tech sector were quite different than what it is shaping up to be today. Jack Ma, in particular, was once a high-profile target of Chinese regulators, disappearing from public view for several months after his criticizing speech against Xi in 2020.
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According to analysts, this change implies how policymakers are now concerned about slowing growth and the US’s efforts to limit China’s technological development. Meeting with tech leaders such as Alibaba’s Jack Ma, Jinping strongly urged them to “show their talent” and remain confident in the power of China’s model and market.
“The line-up of entrepreneurs suggests that Xi’s priority for the private sector is for it to support his goals of achieving technological self-reliance and supply-chain security”
– Neil Thomas, a fellow on Chinese politics at the Asia Society Policy Institute’s Center for China Analysis.
Gathering business leaders has been a pro-move by the President that underscores the importance of private sector innovation and the role it is playing in the global AI arms race. In light of this, Jinping has noted that private businesses have “broad prospects and great promise” to create wealth and opportunity. There is an inherent advantage in developing new industries with China’s governance and the scale of its market.
“It is the right time for the majority of private business and entrepreneurs to show their talent”.
-President Xi Jinping
Analysts note how gaining ground in technology is crucial for China as it races against the US for AI supremacy.
“It’s a tacit acknowledgement that the Chinese government needs private-sector firms for its tech rivalry with the United States. The government has no choice but to support them if it wants to compete with the United States.”
-Christopher Beddor, deputy China research director at Gavekal Dragonomics in Hong Kong.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician working at a magnified microscope, developing a new integrated circuit.
Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets. On February 18, Wells Fargo analyst Aaron Rakers highlighted that there has been an abundance of media reports debating whether a TSMC and Broadcom Inc. (NASDAQ:AVGO) takeover via separation of Intel would be possible and/or feasible. Even though the firm is skeptical, it noted that such a move would be positive.
It further noted that if such a transaction were to take place, the main question would be whether Intel management can extract a break-down value greater than its current $125B enterprise value. Broadcom has been examining Intel’s chip design and marketing business, discussing a potential bid with its advisers that it would likely proceed with if it found a partner for Intel’s manufacturing business, notes The Wall Street Journal. Broadcom and TSMC are not working together.
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $250 implies a 9% upside, however, the Street-high target of $300 implies an upside of 31%.
Overall AVGO ranks 4th on our list of the AI stocks on investors’ radar. While we acknowledge the potential of AVGO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
